Yongsan-gu, Up to 6-Month Deferral on Partial Principal Repayment for Small Business Development Fund

Support for Small and Medium Enterprises and Small Business Owners Facing Delinquency Crisis: Targeting 202 Companies Repaying Loans... Approximately 1 Billion KRW if All Apply

[Asia Economy Reporter Jongil Park] Yongsan-gu (District Mayor Seongjanghyun) has decided to defer the installment principal payments of the Small and Medium Enterprise (SME) Development Fund loans for up to six months.

This measure is to support SMEs and small business owners facing delinquency risks due to the spread of the novel coronavirus infection (COVID-19).

The support targets 202 companies currently repaying loans from the district's SME Development Fund, with an estimated total amount of about 1 billion KRW if all eligible companies apply.

Among SMEs and small business owners who have suffered direct or indirect damage from COVID-19, those without defaults such as principal and interest arrears, capital erosion, or business closure may apply for the deferral. Even if arrears occurred between January and March, companies are eligible if all arrears with financial institutions are cleared as of the application date.

The deferral applies to the installment principal (excluding interest) for the 2nd and 3rd quarters of this year, and companies can choose either a "6-month principal repayment deferral (if more than one year remains until maturity)" or a "maturity repayment date deferral" without extending the loan maturity.

Companies wishing to apply for the deferral must submit the repayment deferral application form, a business difficulty confirmation letter, and other documents by the 19th at the Shinhan Bank Yongsan-gu Office branch (1st floor of Yongsan-gu Office, SME Development Fund One-Stop Window).

Related forms can be downloaded from the announcement and notice section on the Yongsan-gu Office website.

A district official stated, "Depending on the loan amount, it is expected that installment principal repayments of about 2 million to 24 million KRW per company will be deferred."

The loan limit for the district's SME Development Fund is 150 million KRW per company (50 million KRW for small business owners). The terms are a 2-year grace period followed by 3 years of equal repayments, and the funds can be used for business operations, technology development, facility investments, and other purposes.

In April, the district also lowered the SME Development Fund loan interest rate from the previous annual 1.5% to 0.8%, nearly halving it. After deducting the bank's entrusted commission fee (0.8%), the district reduced the loan interest rate to 0%. This provided benefits worth about 170,000 KRW per company.

Last month, the district lent 4.3 billion KRW to 96 companies that applied for loans in the first half of the year, and will continue accepting applications for the second half starting in August, with a scale of 4 billion KRW.

Besides deferring SME loan principal repayments, the district plans to mobilize all possible measures to lead economic recovery, including ▲support for self-employed survival funds ▲support for employment retention for unpaid leave workers ▲support for special employment and freelance workers ▲support for businesses visited by confirmed COVID-19 cases ▲operation of a customized bidding information system ▲priority purchase of SME products.

Seongjanghyun, Mayor of Yongsan-gu, said, "SMEs and small business owners are facing a crisis due to the spread of COVID-19. The district will help resolve temporary difficulties in business operations, contribute to overcoming the crisis, and proactively respond to the deterioration of the financial soundness of SMEs and small business owners."

This content was produced with the assistance of AI translation services.